The 2013 Tesla Model S. The Model S was built from scratch, unlike the company's Roadster, which is built on the chassis of a Lotus sports car.

Tesla,

Tesla fans petition U.S. to allow direct sales to buyers

Article by: Catherine Green

Los Angeles Times

July 5, 2013 - 10:25 PM

A petition to the White House to let Tesla Motors Inc. sell its electric vehicles straight to consumers throughout the United States passed the 100,000-signature threshold it needed this week to prompt a response from the Obama administration.

“States should not be allowed to prevent Tesla Motors from selling cars directly to customers,” the petition, created June 5 by a user in Stow, Mass., reads.

The petition system on the White House’s website requires petitioners to collect 100,000 signatures within 30 days before the administration will officially acknowledge them.

“The state legislators are trying to unfairly protect automobile dealers in their states from competition,” fans of the luxury car brand wrote. “Tesla is providing competition, which is good for consumers.”

Dealer associations in several states have countered that argument, saying it’s the franchise dealership system that encourages competition and protects customers.

“Consumers do better with multiple sellers and multiple retailers in a given market,” a spokesman for the National Automobile Dealers Association said. “If all the stores that sell Ford vehicles were owned by Ford Motor Co., for example, what incentive would there be for any of the stores to sell a vehicle for less than manufacturer suggested retail price?”

Tesla recently faced a series of legislative battles with dealer associations in Minnesota, New York, North Carolina and Massachusetts. Groups in each state challenged the carmaker’s refusal to abide by traditional sales models, sidestepping franchise dealerships to sell straight to its customers online, by telephone or, in some states, inside Tesla stores.

Tesla won its legislative battle in Minnesota in March when the state’s auto dealers gave up efforts to strengthen the dealership law after a House bill appeared destined to languish in a committee. A similar Senate bill was defeated in February.

As a result, Tesla plans to begin selling its cars directly to Minnesota consumers at a service center in Edina. The company also might open an outlet at the Mall of America in 2014.

Tesla supported legislation to allow direct sales in Texas, where employees in showroom “galleries” are not permitted to offer test drives, take orders or discuss the price of the Model S, but that bill was shelved in June. Tesla is also trying to get approved for a license in Virginia.

Tesla declined to offer formal comment on the petition, but Shanna Hendriks, a spokeswoman for the Palo Alto, Calif.-based carmaker, said it wasn’t because of indifference.

“We’re thrilled,” Hendriks said by phone Wednesday. “The groundswell of support that came with [the petition] is really impressive. The ball is in the White House’s court.”

A question of states’ rights?

But the National Automobile Dealers Association said the federal government shouldn’t have a hand in how individual states handle auto sales. “The states have decided that it is in the public interest to require a local presence for the sale, distribution and servicing of the automobile, which is a necessity of modern life,” the NADA spokesman said. “All auto manufacturers should be required to play by the same rules.”

Kirk Brown, managing director of electric car advocacy group Plug In America, said support evidenced by the petition was important.

“It underscores that we need to continue clearing obstacles in the path for electric transportation, and that there is a large and growing market developing for these game-changing electric vehicles,” Brown said. “A new and improved transportation sector is indeed here. Now we need to continue nurturing it.”

Jay Friedland, Plug In America’s legislative director, said auto dealer associations at state and local levels are likely to be formidable foes because of their political sway. He noted that car sales contribute a substantial amount in state sales taxes, which might add to the dealers’ case. But he also cited a 2005 Supreme Court ruling that prohibited restrictions in Michigan and New York on sales by out-of-state wineries.

Friedland said interstate commerce probably would play a role in any developments in Tesla’s case, but “all politics are local. It would be an interesting challenge to get a bill through Congress. But things like that have been done before, so there is a possibility.”